Ontario NDP wants to close rent control loophole

A growing number of people who rent their homes in Ontario are living without rent protection, legislation that protects them from sudden increases in their rent.

But the Ontario NDP are hoping to close a loophole opened by former premier Mike Harris back in 1997, who tried (successfully) to trigger a massive construction boom in the province.

That loophole allows rental units first occupied after 1991 to be exempt from rent control laws. It means that Ontarians living in a new rental, often a condo for rent by the owner, often discover that a landlord can increase the rent by however much they want, as explored in twoarticles in April by The Toronto Star.

Before 1991:

• About 45 buildings constructed per year
• Average of 82 units per building
• Peak construction year: 1958 (208 buildings)

After 1991:

• About 62 buildings constructed per year
• Average of 115 units per building
• Peak construction year: 2006 (154 buildings)

It means your $1,500 per month rent for a downtown Toronto one-bedroom condo could suddenly turn into $1,800 a year later. Or $2,000. Or $2,300. It’s enough to force some people out of their homes.

“When a tenant in Ontario is forced out of their home by an arbitrary rent increase, the system is not working,” she said on Tuesday. “Closing this rent increase loophole is an important step in making housing more affordable in Ontario and ensuring fair protection for all tenants.”

Construction companies and investors have benefited greatly from the new regulation as it allows greater profitability in residential construction and allows rental rates to keep pace with market demand. They argue that the rent controls, original imposed in Ontario in 1975, kept rental rates artificially low and vacancy rates even lower, hurting renters even more.

But the governing Liberals are unlikely to see the rent control question the same way. Ontario’s Minister of Municipal Affairs and Housing Linda Jeffrey said this in a statement at the end of April:

The post-1991 rent exemption was originally introduced – and has been maintained over time – as an incentive for private landlords to build new rental accommodation. This incentive not only helps to renew the rental housing stock but also creates jobs in the construction sector. As such, any changes to this incentive could have an adverse effect on the rental housing sector, the economy and job creation.

The NDP are hoping for a change of heart, especially as the provincial opposition have the Liberals survival — with a crucial budget vote yet to come — in their hands. They’re also arguing that the construction boom intended by the rent control changes haven’t been successful.

Forster notes that most of the new construction have been condos, sold to investors and then rented out second-hand, and not rental buildings.

“This misguided rule has not accomplished what it was meant to, and very little new rental housing has been built,” said Forster. “For tenants living in these newer buildings, it has been 20 years of uncertainty and unfairness.”

User our interactive maps, below, to see how construction is affecting rent control in your building.

TORONTO

MAP LEGEND:Green dots are rent-controlled properties. Red dots are not. Blue dots are properties for which no construction year was provided. Click on each property for full details. Data was supplied to Canada.com by the Toronto City Planning Office.

They’re taller and denser, too. Towers built before 1991 were an average of 82 units, compared to 115 units per building after.

An analysis of 6,482 residential buildings with known construction dates in Ontario showed that 1,447 of those were not restricted by Ontario’s rent increase guidelines.

The largest cluster of exempt buildings is exactly where you’d expect: Toronto’s booming lakeshore condo neighbourhoods. In fact, the M5V, M2N, M6K M6J and M5A postal codes make up more than half of all the unprotected rental properties.

The act did work in some respects, though. Construction did pick up after 1991.

About 62.8 buildings were completed every year since 1991. The busiest year for building completion was the pre-crash extravagance of 2006, with 154 buildings opening. The following year it was 116, and then 107 in 2010.

Before 1991, it was a different story. The average buildings constructed per year in the protected time was only 45. The heaviest construction years in that period were 1958, with 208 buildings and 1954 with 194 buildings. 1969 and 1961 were also heavy years.

Since rent protection disappeared for new projects in 1991, higher density buildings have targeted the Toronto city centre in greater numbers. That’s what the NDP’s GTA Issues Critic, Jonah Schein is worried about.

“This is an important step forward in tenant protection in Ontario and it is long overdue,” said Schein. “There is a lack of affordable housing in our province, and it’s time that this government finally takes steps to address this problem.”

Schein has launched a petition on his website to push for more rent control.

The private members bill is to be introduced into the legislature on Tuesday afternoon as The Residential Tenancies Amendment Act (Rules Relating to Rent Increases).

Portions of this article were taken from an earlier Canada.com report available here.